#2 - JRL 2006-136 - JRL Home
Russia's Putin names 4 main problems for economy

ST. PETERSBURG, June 13 (RIA Novosti) - High inflation, sectoral monopolization, bureaucracy and corruption are the main problems holding back Russia's economy, the president said Tuesday.

Vladimir Putin, speaking at an economic forum in St. Petersburg, said: "Not all the systemic problems in the Russian economy have been solved. I mean [there is] still relatively high inflation, monopolization in a number of sectors, bureaucratic barriers and, unfortunately, corruption."

Nevertheless, Putin said Russia was enjoying a high level of investment thanks to its macroeconomic and political stability, and added that capital inflow had exceeded outflow for the first time in years in 2005.

Russian companies are becoming global market players, investing money in major multinational projects, he told the 10th International Economic Forum.

"This is not just an indication of domestic companies' competitiveness, but also evidence of their high profitability and their desire to [meet] global standards of governance and transparency," the president said.

People in Russia are aware that the nation will be unable to attain global competitiveness unless it creates a competitive environment domestically, Putin said.

He highlighted new opportunities for doing business in Russia, including special economic zones, and Moscow's willingness to share its expertise with foreign companies interested in starting operations in the country.

With foreign oil majors, in particular, seeking to develop Russia's mineral reserves, Putin said he expected other countries to follow Russia's suit and clearly outline rules of access for foreign companies to their strategic industries.

Russia is considering draft legislation on restricting foreign access to some strategic areas, such as deposits of natural gas, oil and gold, but will allow companies to operate in projects as minor partners. Russian companies are simultaneously looking to gain footholds in foreign markets.

"Even countries with developed market economies sometimes fail to establish a transparent access procedure to national economic sectors, when they relate to national security," Putin said. "It is important to avoid creating artificial obstacles to foreign investors to [strategic] sectors under the pretext of national security."

He said he hoped other countries would follow Russia's example and set clear rules on access for Russian investors to their strategic sectors.

The Russian leader said the country's international reserves could exceed the country's foreign debt in 2006.

"We do not need foreign loans any more," Putin said. "We are repaying our foreign debts on time and even ahead of schedule."

The president also suggested that Russia could host the global Expo-2015 exhibition. The country missed out on the 2010 world fair after it went to Shanghai.

"Russia, as an active participant in constructive international processes, intends to put forward its candidacy as host for the 2015 international exhibition," Putin said.